Two people who sued Home Depot for charging sales tax on the value of coupons on some batteries and light bulbs have just had their suit dismissed by the Massachusetts Appeals Court - which ordered them to reimburse Home Depot for eight years' worth of court costs in the case.
In November, 2000, Lisa McGonagle purchased a package of batteries at the Home Depot store in Somerville, using a manufacturer's coupon worth $1 off. State law requires that in such cases, the store only charge a sales tax on the reduced price of the item, but McGonagle was charged the same tax as if she didn't have a coupon - which means she paid 5 cents more than she should have. The same thing happened to her a month later at a Home Depot in Danvers.
In January, 2001, her lawyer threatened a class-action lawsuit. The company responded by offering to reimburse the difference in tax with interest or $25, whichever was greater and said it had investigated, found that Massachusetts Home Depots had overcharged customers by a total of $204 in sales tax and vowed to correct the problem by instructing cashiers not to charge tax on the value of coupons.
The lawyer said no deal. When another customer, Paul Cass, used several $5 coupons to buy energy-efficient light bulbs for $20.40 at the Quincy Home Depot but was charged a sales tax on the original bulb value of $50.40 (an increase of $1.50), the suit was on.
In its ruling, the appeals court said that if the plaintiffs really wanted their money back, under state law, they should have gone to the state Department of Revenue, not Home Depot - and sought a tax refund:
It is undisputed that the company sought and received no profit from the imposition of the sales tax. It transmitted to DOR all tax payments received from the plaintiffs and from the classes whom they proposed to represent. It carried out a legal duty, and not a profit-making exercise.
The court also reversed a lower-court ruling dismissing the case without awarding lawyer's fees to the winner, in this case, Home Depot. It kicked the case back to Superior Court for a determination of those fees. And here's where Neil Chayet would say something witty. They could appeal to the Supreme Judicial Court.
Read the complete decision.
